City Lodge Hotels announced that it will add three bespoke luxury restaurants and pursue new hotel projects in the Western Cape and KwaZulu-Natal after reporting a solid rise in earnings for the 2026 financial year. The group said the performance was underpinned by a surge in international visitors, even as domestic consumers felt the pinch of higher living costs.
According to the company, group revenue grew by 10% and EBITDAR, earnings before interest, tax, depreciation, amortisation and rent, climbed 15% year on year. Diluted headline earnings per share, profit per share after one-off items, rose 4% to 34.4 cents, while the adjusted figure, which strips out more items for a clearer view, jumped 20% to 41.6 cents. The stronger numbers allowed a 22% increase in the final dividend, from 9 cents to 11 cents per share.
The company attributed the upside largely to international travel. It said the United States-Iran conflict pushed up oil prices and the cost of living, which hit South African travellers hard, but left overseas visitors relatively insulated. “International travel has been insulated from the domestic pressures as South Africa continues to be an affordable, sought-after holiday destination,” the statement read.
That overseas demand translated into a 21% rise in revenue from the Western Cape, where five hotels have recently been refurbished. Cape Town, in particular, has become a magnet for foreign tourists seeking natural beauty at lower cost than many coastal rivals. The group managed to keep its average room rate increase at 7% for the year, matching the previous period.
Beyond the numbers, City Lodge highlighted its food and beverage arm as a bright spot. Revenue from that segment grew 14% and now accounts for about one-fifth of total sales. The three new restaurants, opened in Cape Town, Umhlanga and Gqeberha, are described as “bespoke” venues aimed at high-end diners and tourists looking for a unique experience.
Cost pressures remain a concern. The company said total operating costs rose 9%, but cost per room sold only increased 6%, thanks to tighter expense management. It pointed to municipal service-delivery failures and inflation-driven utility price hikes as the main drivers of higher costs. “Cost containment remains a key area of focus, as we try to mitigate the above-inflation increases in utility costs, and the failing municipal services, which often result in additional contingent supply costs,” the release noted.
Looking ahead, City Lodge said sustainability will shape its investment plan. Phase 3 of its solar-panel rollout and additional water-resilience projects are earmarked for the 2027 financial year, a move intended to blunt the impact of unreliable electricity and water supplies that have plagued many South African businesses.
For small-to-medium enterprises that supply food, linen, cleaning services or construction work, the expansion could mean new contracts. The group currently operates 56 hotels across the country, and the planned additions in popular tourist provinces suggest a continued appetite for local suppliers who can meet higher standards while keeping prices competitive.
Tourism, which historically contributes roughly eight percent of South Africa’s gross domestic product, has shown resilience in the face of global shocks. City Lodge’s experience mirrors a broader trend where international visitors offset weaker domestic demand, a pattern that may encourage other hospitality operators to double down on foreign-market marketing.
In short, City Lodge’s earnings boost has unlocked a growth agenda that hinges on attracting more overseas guests, expanding its dining footprint, and investing in greener, more water-secure operations. Whether the plan translates into sustained profit will depend on how quickly the geopolitical situation stabilises, how municipal services improve, and whether the company can keep costs in check while delivering the promised luxury experiences.
